Standing Committee D

[Mr. Joe Benton in the Chair]

Joe Benton: There is a good chance that we will finish our proceedings this afternoon, but in the event of a second sitting, I do not intend to call starred amendments.

Yvette Cooper: I beg to move,
That—
(1) during proceedings on the Housing Corporation (Delegation) etc. Bill the Standing Committee shall (in addition to its first meeting at 4.00 p.m. on Tuesday 2nd May) meet at 10.30 a.m. and 4.00 p.m. on Tuesday 9th May;
(2) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 7.00 p.m. on Tuesday 9th May.
I welcome you to the Chair, Mr. Benton, and I welcome Committee members. As hon. Members will know from our debates in the Programming Sub-Committee and on Second Reading, we have had extensive discussions with Opposition parties about the content and background of the Bill and the need for it. I hope that we can proceed with a broad consensus on the need for the Bill and on its main provisions. For that reason, we have scheduled time today and on9 May for Committee discussions. We stand ready to have further discussions or provide further briefing if Committee members so request. I commend the programme motion to the Committee.

Question put and agreed to.

Clause 1

Power of Housing Corporation to delegate functions etc.

Question proposed, That the clause stand part ofthe Bill.

Joe Benton: I propose to allow reasonably wide-ranging debate on the Bill at this point, but I stress that it is not an opportunity to talk generally about the Housing Corporation.

Yvette Cooper: Clause 1 sets out the purpose of this relatively short Bill. We discussed many issues concerning the clause on Second Reading, but nevertheless it is worth rehearsing some of the key points and details today.
The clause has four subsections that aim to address the technical difficulties that we face as a result of an omission in the legislation governing the powers of the Housing Corporation. The first subsection will give the corporation an express power to delegate the exercise of its functions to individual members of the board, sub-committees, committees and employees.
When the Housing Corporation was created, it was common for public bodies and non-departmental public bodies not to be given an explicit power of delegation. At that time, powers of delegation were more readily taken to be implied. Since then, the majority of bodies set up without explicit powers have been wound up or have had their legislation modernised to confer such powers.

Peter Bone: I understand the Minister, but I do not see what practical difference it will make to give delegating power to the Housing Corporation. At the moment, all that happens is that the board is required to make the decision. An officer prepares the report and it is presented to the board. Under the new proposals, the officer will prepare the report, but it will not need to go to the board. In practical terms, that will remove a safeguard. As far as I can see, such provision does not do anything to improve the efficiency of the Housing Corporation.

Yvette Cooper: Practically, the measure will allow the Housing Corporation to operate in exactly the same way as a series of other NDPBs—English Partnerships, English Heritage, the Commission for Healthcare Audit and Inspection and the Commission for Social Care Inspection. A series of bodies have that kind of power nowadays. Such power will allow the board to take responsibility for deciding which decisions it needs to scrutinise properly, which issues it needs to debate and discuss, where it can add the greatest value to the running of the organisation and which decisions could be delegated far more effectively to officers or sub-committees. It allows the board to have the kind of flexibility that many organisations already have, and it was also presumed that the Housing Corporation already had that power.
Throughout the Housing Corporation’s history it has been clear that the corporation and the Department, as well as housing associations and lenders, thought that the corporation had an implied power. That was clear not only in discussion of previous legislation enacted before 1997, but in the most recent debates on the Housing Act 2003. It was clear that the corporation, the Department and all the lenders thought that the implied power was in place.
The Bill simply restores to the Housing Corporation and all the stakeholders who need to engage with it something that everyone had previously thought already applied. It is therefore not practical to expect the board to operate in a different way from similar bodies. This is about simply giving it a sensible administrative basis on which to work.

Peter Kilfoyle: I understand perfectly that the Bill is regularising an irregular situation. However, my experience of delegating powers at a local level causes me concern—under a Lib Dem council, it cost the city of Liverpool hundreds of millions of pounds. Although such an approach might be efficient on one level, it can be very costly to the parent organisation.
I am not as diligent as many of my colleagues and I was not present on Second Reading, but it appears from clause 1(3) that no matter what has been done in the name of the Housing Corporation, the Bill gives it legality and authenticity. The Bill seems extremely vague about what it covers. Can the Minister enlighten me? I would hate to think that in retrospectively approving what has been happening for the past20 years, we were regularising something that should be looked at in a different way.

Yvette Cooper: My hon. Friend makes an important point. I asked officials the same question during our detailed discussions about the need for the Bill and about its drafting. Its purpose is to regularise decisions that have been taken on the presumption that an implied power existed when it did not do so, according to our most recent legal advice.
It is important to ensure that we can address the many decisions that have been taken previously and not leave housing associations, the corporation and lenders in a state of limbo about previous decisions that have been taken. It is important to put the previous decisions on a particular footing; the issue is the uncertainty that might arise and the fear that previous decisions might be challenged. Even when people do not believe that there is a fundamental basis on which they can be challenged, the uncertainty could cause all kinds of problems for housing associations and lenders in the future, as many of the decisions taken in the past still have ongoing consequences today in terms of investment in stock, new homes and so on.
As my hon. Friend said, it is important to ensure that this is not simply about giving authority to any and every previous decision even should that includea fraudulent decision, for example. That is why subsection (3) refers to decisions being
“evidenced by a document duly executed under its seal.”
That was the lawyers’ response on how to ensure that the provisions would cover decisions that were taken appropriately and duly executed; in other words, decisions that were taken on an appropriate basis according to the Housing Corporation’s procedures.

Peter Kilfoyle: The Minister has reassured me that no one who has done something palpably wrong will be immune from the appropriate strictures. May I ask her a further question, however? What specifically prompted the introduction of the Bill at this time? Is a specific case pending or has the Bill been dusted down as a sort of plan 54(b) to fill up a bit of parliamentary time?

Yvette Cooper: My hon. Friend asks an important question. Originally, the issue was raised with the Department just before Christmas, as a result of legal advice received by the Housing Corporation. Like the Department, the corporation had previously understood that the implied power existed. However, I understand that advice sought as part of routine training raised questions about whether there was such a power. As a result, the Housing Corporation sought further, detailed legal advice, including leading counsels’ advice, to clarify the position.
The advice was that such power could not be implied from the existing statute. The Housing Corporation therefore changed its procedures so that it would be able to take all further decisions at board level, rather than delegating them, and also raised with the Department the need to address the previous decisions. As the time of the House is extremely important and there are many other issues to debate, we considered whether those previous decisions could be addressed in ways other than primary legislation. After extensive discussions with various stakeholders, however, we eventually concluded that primary legislation was the only way to regularise the situation.

Angela Eagle: The issue that we are discussing is very technical. On my reading of things, everybody assumed that the power was there until somebody suddenly discovered that it was not, the penny dropped and leading counsel said, “Oops”. What would the situation have been if that small technical correction had not been brought to us? What would Parliament be risking if what appears to be a technical piece of work is not put into effect? If we were informed about those issues, we might have more of an idea of what has been going on, beyond a lawyer with a light bulb above his head suddenly realising that something that he should have seen long ago was staring him in the face.

Yvette Cooper: My hon. Friend raises an important point that we discussed on Second Reading. The Housing Corporation was assumed to have powers to take at officer level or through sub-committees decisions on a series of things. Such things might have included the registration of housing associations, what are referred to as section 9 decisions, which deal with the transfer of assets from one housing association to another, and issues around borrowing against assets.
Clearly, such decisions have important implications for the future of social housing, new build and the levels at which housing associations can borrow. Although legal advice assured us that, through provisions in the Land Registration Act 2002, housing associations could continue to borrow against their assets, regard their homes, which might have been transferred from another housing association, as their own and make decisions about the future on that basis, it was also clear that there remained some legal uncertainty around those decisions—particularly the decisions taken by the Housing Corporation.
That situation raised questions about decisions that could have important long-term impacts for the future of social housing. For example, the rate at which housing associations can borrow against their assets, the draw-down of loans and the confidence that lenders might have in individual housing associations, or in social housing more broadly, might all be affected in the long term. Maintaining confidence in the social housing sector in those long-term decisions was a serious issue for us. We want this to be an area in which lenders feel they can continue to invest and in which tenants, who depend on social housing, can feel assured of the financial viability of their organisations.

Peter Bone: While I understand that argument going forward, I do not understand the argument about retrospection. Only recently, the Housing Corporation was proposing a general consent under section 9 to cover this particular problem, so I am unsure why are we going down the route of retrospective legislation. If we did not pass this legislation, I do not think that anything that has been done in the past would be challenged. There is no indication that it has been.
As I understand it, the issue arose only becauseof an in-house seminar run by the Housing Corporation—no challenge exists. I cannot believe that lenders would suddenly withdraw support after years of profitable business. I have great reservations about this retrospective legislation.

Yvette Cooper: We had extensive discussions with lenders. They were extremely concerned that without this legislation, in order to regularise the position, decisions might be challenged in the courts. In addition, they were worried that some lenders might decide to withdraw their confidence from the sector, and that that could have a domino effect on other lenders. Financial institutions have about £27 billion-worth of investments in the nation’s housing associations. When those financial institutions raise concerns that without this kind of legislation the investment might not be secure, legislators and Ministers take them seriously.
There are issues about confidence in the sector. Confidence matters when it comes to being able to secure investment in housing stock and in social housing for the future. That is why we take this matter seriously and why we think it is simply not worth the risk to such an important sector to ignore those lenders’ concerns. We should take them seriously and ensure that proper certainty is in place and that there is a proper basis on which the Housing Corporation can take decisions in the future and housing associations and lenders can rely on the decisions that were taken in the past. Any uncertainty about those previous decisions should not be allowed to jeopardise an extremely important sector for the more than 2 million tenants who live in social housing.
That is why we take the matter extremely seriously. Nobody can predict the precise consequences when financial institutions and lending decisions are involved. However, the concerns raised by lenders were sufficiently serious for us to need to respond according to this timetable in order to ensure that all that uncertainty was addressed and everyone could feel confident in previous decisions.
Subsection (1) is a standard delegation provision for bodies carrying out functions similar to those of the corporation. It brings the powers of the corporation into line with other such bodies and allows for administrative efficiency. Given the number of statutory decisions that it must take on a day-to-day basis, it is not practical for all of them to be taken by the board itself.
Subsection (2) gives the corporation and Housing for Wales a retrospective power of delegation to anyof its members, committees, sub-committees or employees, to ensure that the statutory decisions are not invalid by reason of being delegated by the board on the presumption that it had an implied power todo so.
On Second Reading, the hon. Member for Wellingborough (Mr. Bone) asked whether a general consent would suffice, rather than the type of legislation that is proposed. There are two reasons why that is not possible. First, there is a series of other decisions, such as registration of registered social landlords, that would not be covered, and secondly, the uncertainty around section 9 consents would not be fully addressed by such an approach. That could have serious consequences for individual RSLs and for the Government’s social housing programme.
As I said, we have examined not just general retrospective consents but other routes that might exist for resolving that uncertainty, and we have concluded that our proposal is the only one that will work. Retrospective effect is not intended to detract from the rights of any parties, nor to create uncertainty—the usual concerns that are raised in relation to it. Indeed, in the present case, retrospective effect is necessary to protect such rights, and to restore what was thought to be the status quo.
Subsection (3) operates to validate past decisions if they were done or evidenced by a document duly executed under the seal of the corporation or of Housing for Wales. Subsection (4) provides that fixing of a seal is witnessed validly if it was witnessed by any member or employee of the corporation or Housing for Wales in the period before enactment of the Bill. The two subsections draw a firm line under past decisions of the corporation that were duly executed under seal and that were properly authenticated by a member or employee of the corporation. Their aim is to remove any doubt about the validity of such decisions, so that third parties will be able to assume the validity of any decision properly executed by the corporation under seal.
The purpose of the clause is relatively clear; it is a relatively technical provision, but the consequences of not introducing it would be significant and wide-ranging.

Michael Gove: It is a pleasure to serve under your chairmanship this afternoon,Mr. Benton. I thank the Minister for making her case with her customary authority and clarity and I empathise with her, as she is clearly suffering from a seasonal malady, as are so many of us at this timeof year.

Angela Eagle: It will be over your way in a minute.

Michael Gove: I am grateful for that intervention. I confess that I was, as we say in Aberdeen, “thick with the cold” during our debate on Second Reading on Tuesday, so it is my fault that the Minister is infected—I got too close to her in every sense, and those people who object to the Opposition being at one with the Government on the Bill may read more into our relationship from the fact that the Minister has contracted the cold as well. However, I suspect that there were enough germs, or alien elements, in the House of Commons to ensure that she was infected by some other route.
The Minister correctly observes that the four subsections of clause 1 are all intimately related. The first two are the most important: subsection (1) creates a new delegated power, and subsection (2) gives it retrospective effect. Subsections (3) and (4) are principally ways of explaining how subsection (2) should operate, and in that respect are even more technical.
Before allowing the Bill to pass its Committee stage, there are a couple of questions that we on the Opposition side feel are important to raise. As I emphasised when I began my remarks, and as anyone who read our contribution to the Second Reading debate will know, we are as keen as the Government to ensure that the legislation proceeds smoothly to the statute book. However, the parliamentary process affords the opportunity of asking questions and of scrutinising one or two of the statements made by the Government in support of the legislation, and certain of those statements merit scrutiny. I pay tribute to my hon. Friend the Member for Wellingborough and to all my other colleagues who spoke on Second Reading—they did a sterling job of subjecting the legislation to the necessary scrutiny.
I have three broad questions to ask about the legislation this afternoon. For the ease of the Minister and her officials, they are questions A, B and C. The A question is the audit question, the B question is the “but” question and the C question is the consequences question. I shall ask the audit question first. The Minister said that the powers she hoped to vest in the Housing Corporation were powers that had been vested in a majority of non-departmental public bodies and that some of those non-departmental public bodies had been wound up. Some non-departmental public bodies that did not have those powers in the past now have them as a result of modernisation. However, I stress that she used the word “majority”, rather than “all”.
During the Second Reading debate, the hon. Member for Carshalton and Wallington (Tom Brake) asked the Government whether they would do an audit of all non-departmental public bodies in order to ensure that we did not end up having to introduce primary legislation for all those NDPBs that might find themselves in the same position as the Housing Corporation. The House and the public deserve to be reassured that there has been a comprehensive audit of all NDPBs and that we will not see Bills introduced for other NDPBs because the same lacunae exist in their constitutions that have been exposed in the constitution of the Housing Corporation.
The second question is the “but” question, which relates to our willingness to support the legislation with a caveat that we enter along the way. On Second Reading, we explained that we supported the legislation, primarily because without it, there would be an additional element of risk in the financial markets. At the moment, the section 9 consents referred to by the Minister mean that all private sector lenders that have given money to housing associations have the absolute knowledge that that lending is secured. That means that if a housing association goes belly up, they have the first call on its assets. As a result, they can lend money to housing associations at below the market rate. As a result of the way in which the law was presumed to have operated, a private-public partnership allowed social tenants access to private finance at truly competitive rates. It is a very good example of compassionate conservatism in action, and one that we wish to see supported.
The Council of Mortgage Lenders has been adamant that without this legislation, there would be an element of risk in the markets that would price the debt at a higher rate than currently, which would mean one of two things. Either social tenants would pay more, or the rest of us would be taxed more in order to provide a necessary public service. For reasons of prudence—a word dear to the hearts of those in my party—it is vital that the legislation is passed.
However, even though we accept that the Bill must be passed because of the need to give retrospective effect to the section 9 consents, there is still a question mark over some of the decisions that the Housing Corporation may have taken in the past. We accept that the legislation is necessary in order to give retrospective effect to section 9 consents, but I feel, as I suspect that my hon. Friend the Member for Wellingborough does, that some of the other decisions to which we are being asked to give retrospective effect have been insufficiently clearly spelled out by the Minister and her Department.
The Minister talks about decisions referring to the registration of associations and one or two other decisions that have been taken by the Housing Corporation in the past. It would be helpful if she made clear what those decisions were and why they required the same legal underpinning as the section 9 consents. It would also be helpful if the legal advice that counsel gave to her Department and the Housing Corporation were put in the public domain. We accept the overwhelming need for the legislation, but we believe that the process of scrutiny has exposed some areas where more information is required.
My final question is the consequences question.

Peter Kilfoyle: I am grateful to the hon. Gentleman for giving way before he goes on to his final question. I shall pass over the oxymoronic phrase “compassionate conservatism”. Before the hon. Gentleman deals with the consequences, will he explain what he means by an audit of NDPBs in relation to delegated powers? Is he suggesting that all of those bodies should have delegated powers? I am not quite clear about that.

Michael Gove: I thank the hon. Gentleman for giving me the opportunity to return briefly to this issue, which is of great importance. I stress that it was first raised in the House by the hon. Member for Carshalton and Wallington. He made a good point, which I am more than happy to endorse. The hon. Gentleman pointed out that the Housing Corporation was presumed to have a power, but in fact lacked it. We are now legislating to give it a power that everyone assumed that it had. Fair enough, we all say. But it occurred to the hon. Gentleman that there might be other NDPBs that everyone assumed had this power but which, in effect, were merrily making decisions without the required appropriate legislative cover.
The Minister said that the majority of NDPBs that were set up when such powers were not granted had either been wound up or modernised, and we are satisfied that the majority of cases have been reviewed. However, majority is not the same as totality. The implication of her words is that there may be some NDPBs that everyone believes should have the right to delegate powers to committees or officers, but that are, in fact, operating in a legal black hole. We want to ensure that a proper audit of every NDPB is undertaken in order to ensure that in a few weeks or months or in a year’s time we do not need another piece of primary legislation to tidy up.

Peter Kilfoyle: I understand perfectly that the matter was raised initially by the Liberal Democrats, but is the hon. Gentleman suggesting that there ought to be a trawl through the NDPBs to determine where there are gaps? Has he considered the difficulties and cost of doing that?

Michael Gove: We have considered the difficulties and cost of not doing that. We have to legislate at this point because an element of risk has been introduced into the lending process, which, unless it is addressed, could lead directly to negative consequences for social housing tenants, whom the hon. Gentleman and I wish to be in as secure a position as possible. If other NDPBs are spending public money and taking decisions in the public interest, but do not have the legal authority to take such decisions, despite the fact that everyone assumes that they have such powers, we could be in the position not just of having to legislate but of having to bail out organisations that have been operating in legal limbo.
I ask that some of the civil servants in the Office of the Deputy Prime Minister use some of the time and the resources that we have given them to ensure that the same situation does not occur again in that Department or any other.

Peter Kilfoyle: I would have thought that the onus would be on the Cabinet Office rather than the Office of the Deputy Prime Minister to organise a trawl through public bodies. However, my question remains. The hon. Gentleman pointed out the cost of not doing such a trawl, but has he considered the cost and the complications of doing one? Is he aware of how many NDPBs might fall foul of his imagined problem with the law somewhere down the line?

Michael Gove: The burden of the hon. Gentleman’s point is that, because of the administrative cost, we should allow various organisations to operate outside the rule of law. As a matter of philosophical principle, we on this side of the Committee are unhappy with that. We want to ensure that organisations use their powers within the scope of the rule of law.
I suspect that many of the areas that we are talking about are administrative. I suspect, but do not know. The Government have a responsibility to ensure that public money is spent in line with the rule of law, and that decisions are delegated to the appropriate level and taken in line with the rule of law. That responsibility falls on the Government’s shoulders, not on ours. The Minister stressed in her speech that the majority of bodies likely to be affected had changed their constitution or been wound up. I trust her word absolutely. If she knows that a majority of bodies are out of the woods, that implies that a minority—presumably a small one—are not. As the Minister can already state with confidence that the majority are out of the woods, much of the work has, by implication, been done.

Phyllis Starkey: With the lapse of time, the hon. Gentleman’s precise words have become slightly muddled up in my mind, but I believe that he said he had made an assessment of the cost and effect of not undertaking the audit. Can he enlighten us as to what that estimate of cost and effect was?

Michael Gove: As I explained in my response to the hon. Member for Liverpool, Walton (Mr. Kilfoyle), that audit has—by any reasonable inference from the Minister’s words—already taken place. If the Minister can state with confidence that a majority of non-departmental public bodies that are in a similar position to the Housing Corporation have either been wound up or had their constitution modernised, by definition she must have made an assessment of how many non-departmental public bodies are affected and concluded that a majority of them are not affected. The question is therefore more properly put to the Minister.
I know that the hon. Member for Milton Keynes, South-West (Dr. Starkey), in her function as chair of a Select Committee, takes her responsibilities of scrutinising the Executive seriously, but it is for the Executive, not the Opposition, to say how many bodies are likely to survive in their un-modernised, still operational state, and are therefore likely to require the form of scrutiny that we are discussing.

Phyllis Starkey: I put the question to the hon. Gentleman because he asserted that he had estimated the cost and effect of not carrying out the audit. I simply ask him to share the results of his assessment with us. What is the cost and effect of not carrying out the audit, which he says he has measured?

Michael Gove: The hon. Lady is labouring under a misapprehension and is drawing the wrong inference from my words.

Phyllis Starkey: Well, you should have been clearer.

Michael Gove: I have sought to be crystal clear on the subject. My point is that we have seen the consequences of failing to do that proper audit work in one particular area. I am not making a party-political point because, as the hon. Lady knows, the original form of the legislation was passed under a Conservative Government, but we know that the consequence of waiting until now to put the matter right is introducing an element of risk into the lending market.
I do not know what the consequences would be in a variety of other areas, but I can prudently give this estimate. If one considers the amount of time that it is likely to take the Minister’s civil servants and others to look at the bodies that might be affected, if one weighs in the balance the consequences of not conducting the audit and if, in even one case, a situation similar to the one that we are discussing were likely, any normal person would conclude that it was worth while conducting the rest of that audit, rather than risking undergoing the process again. I talked about compassionate Conservatism, but that seems an eminently common-sense Conservative point of view.
I repeat for clarity that the evidence is before us. The Minister said that a majority of bodies were affected. She asks the Opposition a series of questions, but I noted that when the Minister mentioned that a majority of bodies were affected, the hon. Member for Milton Keynes, South-West, did not ask a question of the Executive—a rare lapse from the otherwise Olympian standards that she sets herself in the scrutiny business.

Angela Eagle: If the worst scenario came about and other non-departmental public bodies had such lacunae in their rules, we would have to legislate once again to put things right, so the hon. Gentleman’s point about our not being bothered with legislation in future does not hold water. We would avoid further uncertainty arising if there were such a flawed NDPB, if we want to put it that way; but actually Parliament would still have to legislate to put right any other such flaws that were discovered.

Michael Gove: I have no wish to act as a judge assessing the hierarchy of interventions, but the hon. Lady makes an even better point than the hon. Member for Milton Keynes, South-West did. It is quite right that legislation would be required in those circumstances, but it would be better if we introduced one measure that could cover all the relevant bodies, rather than a succession of piecemeal Bills. It would be appropriate if we could ensure in each of the particular areas where each of the NDPBs operate that we are capable of legislating in such a way as to ensure that the next time such functions are affected by legislation, we can take into account any lacunae that have been uncovered, rather than leaving that sine die and then waiting until we are surprised, as we have been with this particular discovery. It would be better to be in a position of knowledge than one of ignorance.
This would be prudent housekeeping on the part of the Government, although the hon. Member for Wallasey (Angela Eagle) may prefer to remain in a position of ignorance, and to be surprised whenever a lawyer—a barrister, for instance—reminds her or this House of a mistake that we have made. I repeat for the benefit of all those who have intervened that this prudent housekeeping has already, by clear implication, been undertaken by the Department.

Angela Eagle: As you know, Mr. Benton, I am not in favour of anyone staying in a position of ignorance at all. The important thing about this situation is that nobody knew that there was any problem until one lawyer discovered a flaw in another lawyer’s work. The problem of uncertainty did not arise until a seminar took place at the Housing Corporation. Therefore, the issue is not to do with waiting to see if there are more lacunae in the law, because we in Standing Committees know—even if this is not known anywhere else—that lawyers are never perfect in their framing of legislation, which is why we have our job to do here.
We need to take a look at the matter, but in a reasonable way, and we do not need to start a load of hares running, so does the hon. Gentleman not agree with me about possible flawed legislation in all NDPBs, many of which do a great number of crucial things, and all of which may be thrown into uncertainty if he—

Joe Benton: Order. That is a lengthy intervention.

Angela Eagle: It is a long sentence, but perhaps the hon. Gentleman will address my point.

Joe Benton: Before the hon. Gentleman responds to that intervention, I should point out that although I said at the beginning of the sitting that I would allowa wide-ranging debate, we are moving away slightlyfrom the Housing Corporation, so I must ask the Committee to come back to it.

Michael Gove: Thank you, Mr. Benton. I am pleased by your ruling on this matter, but I am also delighted to be able to respond to the point that the hon. Member for Wallasey is making. Behind her intervention and those of the hon. Members for Liverpool, Walton and for Milton Keynes, South-West lies a reluctance to see institutions governed by the rule of law, public money spent as wisely as possible and civil servants do what they are paid to do—scrutinise the effective working of government. Given that the Minister herself emphasised that a majority of NDPBs were not in danger, we already knew that only a minority are affected and that part of the work of scrutinising the bodies has been undertaken.

Joe Benton: Order. In case I did not make this clear to the hon. Gentleman, let me state again that I would like the Committee to return to the subject of the Housing Corporation and the clauses.

Michael Gove: Thank you very much, Mr. Benton.
Having talked about the “but” question, I want to turn to the consequences question, which touches on one of the points made by the hon. Member for Wallasey. The Government have made it clear that they intend to ensure that the Housing Corporation’s functions are reviewed, and the potential merger of the Housing Corporation with English Partnerships has been widely slated and discussed. Should that merger take place, primary legislation would be required. As my hon. Friend the Member for Wellingborough pointed out on Second Reading, a significant and important measure governing the future working of the Housing Corporation might come before us shortly. It would be helpful if the Minister could explain what the nature of that legislation might be, what impact the debate we are currently having will have on it and what further thoughts the Government have about modernising the constitution of the Housing Corporation in the light of this already publicly acknowledged change—or potential change—to the way in which it works.
I mention that point because I am sensitive to the points made by the hon. Member for Wallasey, who pointed out that if we expose flaws in other NDPBs, we may need to legislate. It may be the case that the flaws that we uncover will be capable within a few months of being addressed in legislation drafted in the relevant Department. However, it may well also be the case that an audit puts all our minds at rest because there is nothing to worry about. Nothing would give me greater pleasure than knowing that this Minister and every other Minister could sleep easily at night knowing that the non-departmental public bodies for which they are parliamentarily accountable were operating within the rule of law. Ensuring that the rule of law governs the functions of an important non-departmental public body is the burden of the Bill. If the Minister can reply to those three points with her usual clarity, brevity and authority, Conservative Members will be satisfied.

Peter Kilfoyle: I am usually sceptical about anything that is retrospective, most particularly the law, and notwithstanding the twaddle spoken by the hon. Member for Surrey Heath (Michael Gove), Labour is a party of the law and of value for money. We do not need lessons or side swipes from him on those matters.
I must comment on the hon. Gentleman’s attempt to divert the discussion into a cul-de-sac with nonsense about a trawl through all of the NDPBs. Most of them, by his own admission, were set up inadequately by the previous Conservative Administration. It is the Labour party in government that has had to try put those wrongs to right. His point was entirely spurious.

Peter Bone: Does the hon. Gentleman agree that the original legislation was set up correctly and that Parliament, at the time, expected the board to approve the decisions? It was not the original legislation that was wrong, and it was only the subsequent action by the Housing Corporation in not seeking board approval that changed the position.

Peter Kilfoyle: That goes to show how the previous Administration had become divorced from the day-to-day realities of running an organisation, particularly when it was handling large amounts of public money and wanted to do it efficiently. It could certainly be argued that both sides were remiss, but I know which was more remiss given the legislation as it was originally drawn up.
Lastly, but not least, the trawl proposed by the hon. Member for Surrey Heath is a fine thing to come from the party that goes around the country trumpeting that we should remove bureaucracy, red tape and the sort of actions that are inhibiting the private and public sectors. He wants to create a trawl for non-existent problems. If the problems exist, they will be dealt with by the Government. However, that is a separate situation from creating a bonanza for lawyers and—as a journalist, he will know about this—a non-existent story that the Conservatives can trumpet from the front pages.

Michael Gove: I remind the hon. Gentleman, who was busy on the day that we were debating these matters on Second Reading, that the Under-Secretary of State, Office of the Deputy Prime Minister, said:
“We have studied the situation, and we are not aware of any other bodies for which such retrospective legislation is required.”—[Official Report, 25 April 2006; Vol. 445, c. 534.]
The Under-Secretary said that he was not aware ofany other bodies having conducted, by implication,a review. Today, the Minister now present said that a majority of bodies were in the clear. There is a difference between none and a minority, and I was specifically addressing an inconsistency in the Government’s position. By implication, the Minister has made it clear that a survey or an audit has been carried out, but the problem is that it has not been effective.

Peter Kilfoyle: I am quite sure that the Minister will speak for herself, and eloquently too, but I have to say that the hon. Gentleman is simply trying to score political points out of a straightforward, cogent and coherent small measure that we all agree needs to be passed. It is sensible. We all understand that its conception was accidental, but there is no evidence, other than the argument about semantics in which he is now indulging, to suggest that the problem is more widespread.

Phyllis Starkey: Does my hon. Friend not agree that the implication of what the hon. Member for Surrey Heath was suggesting was that we should leave the Housing Corporation in an irregular situation while we trawl around each NDPB in case it might be in the same position, before we formulate another measure covering everybody? In the meantime, the current situation would continue.

Peter Kilfoyle: I am grateful to my hon. Friend, because she reminds me that many on the Opposition Benches have that wild and wide-eyed attitude whereby they are always looking for problems that do not exist. When problems do not exist, they are often prepared to invent them to preoccupy Ministers who have got better things to do with their time, as has happened with this Bill.

Daniel Rogerson: It is indeed a pleasure to serve under your chairmanship, Mr. Benton. I am somewhat bemused by the direction that our discussions have taken, but I take it that that is down to the time pressure under which we are operating.
I shall address my remarks primarily to subsections (1) and (2). Subsection (1) gives the board of the Housing Corporation the power to delegate decision making to appropriate levels, which seems sensible. The capacity to delegate some decisions to committees, officers or employees of organisations is common, and it is an effective way of carrying out business. Local authorities are a prime example. I believe that they were mentioned on Second Reading, which I was unable to attend as I was in Committee scrutinisingthe Commons Bill, to which I had tabled several amendments.
I have always supported the principle of devolving power to the lowest level possible. The delegation of powers within the Housing Corporation will facilitate greater opportunities for its officers and employees to engage in debate with people throughout the country, so that not everything will have to return to the national body for discussion. As such delegation has been in practice in the organisation for several years, although it might have been outside the letter of the previous legislation, it seems sensible that such powers be granted. Subsection (1) makes a great deal of sense. 
Subsection (2) refers to the need for retrospective legislation, which has been a problem for hon. Members; the hon. Member for Wellingborough has mentioned it several times today. Given the substantial housing investment secured through the corporation, any questions about earlier allocations could give and may have given unnecessary cause for concern to investors, housing associations and perhaps ultimately to tenants, too. I should be interested to hear what steps the Department took in the period preceding the Bill’s entry to the House to reassure the public that there was no need to panic.
The need for the Bill arose through a change in the accepted working practice of organisations. As the hon. Member for Wellingborough said, the reason was a gradual change in the working of such organisations during the period in which the Housing Corporation has existed, rather than poorly drafted legislation. However, I would hate to be generous to previous Conservative Governments, despite the fact that the hon. Member for Surrey Heath has generously pointed out that it was my hon. Friend the Member for Carshalton and Wallington who raised on Second Reading the point about auditing other organisations, which has allowed us such a fruitful diversion this afternoon.
As such delegation has become commonplace, it is understandable that it was assumed to be lawful. Most other organisations dealing with the Housing Corporation would customarily have worked in that way and would have expected the corporation to have had such powers. From time to time, situations crop up in local government whereby customer practice has developed and it is assumed that at some point an agreement was made allowing it. As employees move on, new members of staff take it as read that the organisation’s operating practices are based on its original founding principles, without thinking to question whether there were any holes in the underlying framework.
It is to be welcomed that the error in respect of the Housing Corporation has been brought to light and that Ministers and officials have sought to clarify the position. As the hon. Member for Surrey Heath said, allowing such an uncertainty to continue might have jeopardised future investment. I am sure that all members of the Committee want such uncertainties brought to an end and confidence in the process restored.
The reluctance to countenance retrospective powers is a natural initial response, but in this case it is retrospective action that confirms past decisions and seeks to bolster confidence, rather than action that might call into question the basis on which other decisions have been taken. Given that the measure will increase confidence rather than alter the position, it seems sensible, and I hope that it will allow a line to be drawn under the past use of delegation by the corporation.
I am grateful to the Minister for drawing attention to the underlying purpose of subsections (3) and (4), which is to ensure that retrospective action to which they refer will cover only action taken lawfully and in the spirit of the original Act.
On that basis, I am happy to support clause 1. I do so not out of a generous desire to underline the compassionate nature of my party, although it does have such a nature. I find it a little odd that members of the Conservative party have now felt the need to qualify their conservatism at every opportunity. I can conclude only that that relates to the experience of most people, which is that conservatism has been very different from compassion. I am grateful for being allowed to deviate slightly from the text of the Bill, and I support the clause standing part.

Peter Bone: It is a great pleasure to follow the hon. Gentleman who, apart from his last few sentences, has made some powerful points. I draw attention to my interests as recorded in the Register of Members’ Interests and the fact that I am a member of Rockingham Forest housing association, which is an unremunerated position.
Can the Minister tell us whether the bright spark that found out from the seminar that the corporation was acting ultra vires has been promoted or relegated? Obviously, the person has started something that is both serious and important, and which should be examined.
On Second Reading, much of the debate was about disposals. I said that general consent under section 9 would cover such matters, so we would not have to pass retrospective legislation. The Minister said earlier that other areas are not covered by general consent and that that is the real reason why we need retrospective legislation. Such a matter needs to be spelled out in some detail so that the House can make a proper decision about it.
I am always worried about being asked to pass retrospective legislation. This is a rushed Bill, and quick retrospective measures are usually bad legislation. I have read statements that the Housing Corporation has been issuing since the turn of the year and nowhere in them was a sign of panic that, if the House of Commons did not pass an Act, things would go pear-shaped. Considering that the merger with English Partnerships is very much on the cards, I wonder why we could not have waited a little longer, considered the matter in great more detail and perhaps have improved the situation.
The hon. Member for Liverpool, Walton made the point about regulation and cost. We must first bear in mind the board of directors. If I were on a board of directors and my organisation was disposing of assets worth a considerable amount and creating high charges, I should expect such matters to be board decisions. I accept that the work would be done by an official or a sub-committee, but I would expect the legislation to come to the board. The Bill will remove that requirement, and that is what I am worried about.
It is even worse because it is not the Housing Corporation but the housing association that works on disposals and charges. The housing association doesall the work and preparation, exercises all thedue diligence and then reports to the Housing Corporation.
The Housing Corporation costs more than £40 million a year to run. Its board collects a remuneration of around £250,000 a year. Would not the Bill have been an opportunity to consider whether the Housing Corporation needs to approve such disposals? If we could have removed the new measure—the Housing Corporation does not do anything but rubber-stamp, and it has never turned down a request from a housing association—and a layer of bureaucracy and red tape, that would have been worth while. We could have saved a great sum of that £40 million a year.
We have missed an opportunity. It is a bit of a knee-jerk reaction. Will the Minister take on boardthe possibility of considering, when and if the mergerof English Partnerships happens, whether that requirement could be removed from the Housing Corporation, perhaps saving millions of pounds a year? I understand how the Government started on the Bill—they were under pressure from lawyers and stakeholders—but if they had looked at it a bit more carefully and waited a little longer, they could have come up with a better Bill.

Angela Eagle: I shall take a small amount of time to support the Bill and clause 1. It has been rare during my time in Parliament to come across a piece of Government legislation so thankfully short. After working on various Finance Bills and all sorts of other humongous 300 and 400-clause Bills, something so simple is a joy.
Given the nature of the problem, the Government were quite right to introduce a quick Bill to remove the legal flaws discovered by the lawyer doing the seminar at the Housing Corporation. The hon. Member for Wellingborough speculated on what might have happened to that lawyer. I hope that he or she was granted an immediate post in the office of parliamentary counsel, so that we can ensure that future Bills are drawn up with the same rigour that the lawyer brought to that seminar at the turn of the year.
It is clear that once some such thing has come to light, it is important—for the sake of the lenders and potential creditors of the social housing system provided by the Housing Corporation and its 1,800 housing associations—to put right that legal flaw quickly if stability is to be maintained and uncertainty banished. That is why I believe, unlike some Opposition Members, that it is important that the Government have acted quickly to get rid of legal uncertainties.
As always, retrospectivity is an issue, but my hon. Friend the Minister is right to point out that the retrospectivity implied in the Bill will shore up the status quo as it was understood before the infamous seminar. It will ensure continuing stability and confirm in law something that everyone thought was already the case. It will not disadvantage anyone.
The key point about the Government’s quick move is that it will not only remove uncertainty and ensure that lenders do not change their attitudes to lending housing associations money at particular interest rates but will avoid all sorts of potential mischief with litigation, which can sometimes arise in such circumstances. In answer to my question about the important decisions that might be affected by the uncertainty, my hon. Friend the Minister mentioned the registering of housing associations; such decisions might also involve the transfer of ownership or the taking out of loans at a reasonable interest rate that will not suddenly be put up. The Bill is technical and has important practical consequences for ensuring stability, because it recreates a legal certainty that had suddenly been lost.

Peter Bone: Is the hon. Lady not concerned at the prospect of removing the requirement for the board to scrutinise the registering of housing associations? Does she not think that that should be done at board level?

Angela Eagle: Not necessarily; the hon. Gentleman should remember that a great deal of the experience of how housing associations work, operate and run themselves was not there 40 years ago when the legislation was first written and the idea of housing associations was new. The removal of the requirement is not necessarily a problem at all. Lenders would not be remotely interested in lending to dodgy organisations or dodgy housing associations. The hon. Gentleman alluded to his entry on the register; he will have experience of such issues, and I am sure that he will agree with my assessment.
To come back to the point that I was making,2 million tenants live in this part of our social housing system. I was interested to hear the hon. Member for Surrey Heath confirm that social housing was a necessary public service. That reassures us somewhat about the general evolution of the Conservative party; having realised that social housing is back on its agenda, we shall sleep a bit better in our beds. The key thing is that the sudden throwing into doubt of the legal position when 2 million tenants have their housing well-being looked after by 1,800 organisations is not desirable, even if it is due to technical reasons. That is why it was important that the Bill was discussed quickly.
I am afraid that I do not go along with the “but” question introduced by the hon. Member for Surrey Heath. The question was more one of setting the hares running. It is important for us to have confidence in our NDPBs and how they work, and not to worry that because one flaw has been found—one of the oldest, as it happens—it will somehow be reproduced all over the place. Setting such hares running can cause uncertainty where there is none and create needless adverse responses. Although such things may be fun for the Opposition, there can sometimes be consequences. I hope that the hon. Gentleman will forget about his scaremongering on those issues and be reassured that the problem is not a recurring one.
In conclusion, I support the Bill and commend my hon. Friend the Minister for acting so quickly on an issue that, although technical, could have had adverse effects if allowed to run on. I commend her for deciding to introduce the Bill rather than waiting until some time in the future and letting the uncertainty play havoc on the financial markets or, even worse, provoke malicious or mischievous challenges to decisions that may well have been made a long time ago.
It is important that such loopholes are closed quickly in the interests of good governance and the security of the 2 million housing tenants who rely for their homes on housing associations. I support the Bill and commend my hon. Friend the Minister for bringing it to us so quickly.

Yvette Cooper: The debate on clause 1 has ranged widely, and I should like to respond to some of the points made.
The hon. Member for Surrey Heath began by sympathising with me for my seasonal malady. It is seasonal, although it is provoked by pollen rather than by a virus. Since hay fever is not yet contagious, he escapes blame. I also assure him that he need not worry about how close he gets to us.
The hon. Gentleman raised a series of questions for the Government, which I shall try to answer. The first was about what he described as an audit of non-departmental public bodies. My hon. Friends the Members for Liverpool, Walton, for Wallasey and for Milton Keynes, South-West also referred to the issue.
The officials in the Office of the Deputy Prime Minister have done an audit of all the non-departmental public bodies that report to our Department. We found that none were in the position that has been mentioned. We also raised with the Cabinet Office the need to co-ordinate across Government more widely on the issue. We are not aware of any other bodies that need such powers and do not have them. There may be other non-departmental bodies that do not need such powers and do not have them. As I said, we are not aware of any other body that is in this situation, but I am not in a position to give guarantees for other Departments, and it would not be appropriate for me to do so. We tried to examine comparable bodies. For example, we examined the circumstances of English Heritage and found that having been established in 1983, it had an express power to delegate.
We need to be mindful of the warning given by my hon. Friend the Member for Liverpool, Walton that we should not attempt to create work either for lawyers or for legislators. Equally, the issue of the Housing Corporation is significant because, unlike many non-departmental public bodies, it deals in the financial markets and its operations have implications for them. Organisations in such situations are different from other non-departmental bodies, which may not be in engaged in such financial decisions, which have so many wider ramifications. The significant point is that when modernising legislation is introduced we need to ensure that such issues are properly scrutinised.
The second question put by the hon. Member for Surrey Heath was which decisions required the same legal underpinning for the past, as well as the section 9 decisions to which we referred. The issue is about the statutory functions of the Housing Corporation; it is not about which kind of biscuits to get for the board meeting. It covers consents under section 9 of the Housing Act 1996, which requires a registered social landlord to obtain the consent of the corporation for any disposal of land under section 8 of the Act, which includes the placing of charges by lenders as security against a loan and rule changes for RSLs. For example, if someone does not have a valid consent to theirrule changes, that could raise questions about constitutional amendments for the housing association and for decisions that flow from them. Some of those amendments may be significant while others may not be. Either way, it is important to have certainty about those decisions.
The provision may also cover the Housing Corporation’s ability to appoint members to the board of an RSL that is causing problems and is under supervision. We would not want those sorts of things challenged in the court by people who are causing problems within the RSL if it is already under supervision and needs to be regulated further in the public interest.
In each of those areas when we have pursued this matter some legal comfort regarding rule changes might be provided by other legislation, for example the Land Registration Act 2002, the Companies Act 1985 and the Industrial and Provident Societies Act 1965. Having looked into that in some detail, we came to the conclusion that there was insufficient certainty in relation to the statutory functions for us to expect the Housing Corporation, the housing associations and their lenders to proceed on the basis of the appropriate comfort needed for future decision-making.
The hon. Member for Surrey Heath asked whether we could publish our legal advice. We considered that as well because we were keen to be as transparent as possible. As the hon. Gentleman knows, legal advice is covered by legal privilege. There may be challenges in court in advance of the legislation reaching the statute books, and for that reason—and the precedents that would be created—we concluded that it would not be appropriate for us to publish that advice. We did, however, provide a summary of the key points. We relayed the key points to the Council of Mortgage Lenders when it raised this issue, and I am happy for officials to provide further advice to the hon. Gentleman on the issue if he feels that it is important. We made sure that we relayed the principles of the legal advice we received to the House and to the Opposition parties in order to allow proper discussion of the issues.
The third question that the hon. Member for Surrey Heath raised concerned consequences and the relationship between the Housing Corporation and English Partnerships. The hon. Member for Wellingborough also raised the issue and asked whether future legislation would be needed. We should be clear that we have not taken a decision about the relationship between the Housing Corporation and English Partnerships. We are consulting and having a wide debate about that and we have definitely not made any decision yet about the appropriate way forward.
If the two organisations were to merge into a new one, primary legislation would certainly be required, but it would take time to draw up primary legislation and to take decisions about the functions that a new body would have. It would be irresponsible of us to delay the measures in the legislation until such time as decisions were made, especially as it may be the case that no legislation will be introduced, or it may be some time before the legislative opportunity arises. I assure the House that were it to be the case that new legislation created a new body, we would ensure that the express power was included as part of that legislation.
My hon. Friend the Member for Liverpool, Walton raised a point about not searching for non-existent problems. Nevertheless, we have made it clear that we must ensure that all of our non-departmental bodies can function effectively and appropriately. I welcome the support of the hon. Member for North Cornwall for clauses 1 and 2. I agree with him that this is timely legislation which we need to pass in order to address the problem.
The hon. Member for Wellingborough raised a series of questions to which I shall try to respond. He asked whether we could wait longer. As I have already said, it is not appropriate to do so. He said that the Housing Corporation was not panicking so we should not legislate in haste, but he would accuse the corporation of extremely irresponsible behaviour if it started panicking about this issue. The Housing Corporation and its lenders have been very responsible in their approach and part of the reason for the calm and measured tone of their response is that we made it clear to them from an early stage that we wanted to resolve the position and would be prepared to introduce legislation, if necessary, in order to do so. It has proved necessary, and we have responded to their concerns.

Peter Bone: The Minister just said that the Housing Corporation was aware very early on that the Bill was coming before Parliament. In that case, why were they still pursuing until recently the idea of a general consent under section 9?

Yvette Cooper: As I said, the Housing Corporation first raised the issue with the Department in December last year and we had further discussions and meetings in January and February. We made it clear to the corporation that we wanted to resolve the situation, but also that we needed to explore every other avenue of doing so because it was important not to take up parliamentary time if there were alternative routes. That is why we asked the Housing Corporation to look further at issues around general consents, and we looked at them as well. We have been very clear with the corporation and with the lenders from the beginning that everyone agreed that the situation needed to be resolved to provide a secure basis for and proper certainty around future and retrospective decisions, but that we needed to work out in some detail with it and other stakeholders how we took the matter forward.
The hon. Member for Wellingborough asked whether section 9 decisions could have been covered by the general consents. It is correct that other decisions could not have been covered by general consents, as only section 9 of the Housing Act 1996 on disposal of land provides for general consents. Therefore, we would not have been able to cover some of the other issues around regulation, and regulatory and registration decisions through a general consent.
In addition, the legal advice was that there was no certainty that a retrospective consent to dispose of land would be held by a court to be valid; that even though it might provide some considerable comfort it would not provide legal certainty. On that basis, we thought it appropriate to legislate to provide certainty.
We considered whether section 9 consents were needed at all. In fact, the Elton review considered this and decided that it was not appropriate to remove the requirement for a section 9 consent to be given by the Housing Corporation. One of the issues is that social housing assets are in part funded by the taxpayer. They are a public investment and provide an important public service. Therefore, there are significant questions about the protection of taxpayers’ money and the public interest if housing associations are able to dispose of assets that have been part-funded by public investment and by taxpayers. The hon. Gentleman is welcome to raise the matter as part of a wider debate about the Housing Corporation and English Partnerships. Obviously, it would be more fruitful to discuss that wider question, which has far wider ramifications, in that way rather than trying to debate it within the scope of this Bill, which has a limited purpose.
My hon. Friend the Member for Wallasey and other hon. Members asked what had happened to the lawyers who uncovered the problem in the first place. I am not able to say what has happened to them, to the many lawyers who I presume have been consulted over the decades, or to the officials under this or previous Governments who perhaps failed to consult lawyers when dealing with the issue on previous occasions. Nevertheless, now that we are clear that there is a problem, everyone—lawyers, officials and so on—is working hard to resolve it. My hon. Friend is also right in saying that we should be trying to prevent court challenges and unnecessary litigation in the future.
Finally, a question arose while my hon. Friend was talking about whether registration of RSLs should be done at board level. In fact, the registration of RSLs is done not by officers but by sub-committees, whichis a perfectly sensible approach for the Housing Corporation to take. Obviously, it is for the corporation to decide whether that should be done by the main board or by a sub-committee. The point is that the Bill allows the corporation to take that decision itself, rather than taking everything through the board. I hope that I have responded to every question that was raised on clause 1.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill to be reported, without amendment.

Committee rose at twenty-four minutes past Five o’clock.